FIN622_Offline solved quizzes
spring 2009
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Question 01
Fill in the blanks.
1. A cost that changes with the change in output level is Variable cost.
2. The two types of cash flows connected to investment in shares are Dividends and Capital gains.
3. The point at which the sum of variables and fixed costs are equal to total revenue is called Break even point.
4. The cost of surrendering an existing benefit in favor of next best available benefit is Opportunity cost.
5. Sunk Cost, which has been incurred in the past and Committed Cost i.e. Future cost are examples of Non- Relevant
6. There arte two situations of capital rationing one is Current or Single Period CR and other are Multiple Period CR.
7. Venture capital firms or individuals specialize in pooling funds from different sources. Also know as private equity. No physical collateral is required.
8. Banks require Collateral or Security for granting loans.
9. Economy-wide sources of risk that affects all the stocks being traded in market is known as Systematic risk.
10. Relationship between Nominal and Real Interest Rates is known as Fisher Effect.
Fill in the blanks.
- Portfolio a group of assets in which investor has investment or a combination of securities of investment.
- Investment in coca cola and in Compaq is very variable. But on many occasion a decline in the value of one stock was canceled by a rise in the prices of the other. Therefore there was an opportunity to reduce your risk by Diversification.
- Systematic Risk is measured by Beta Coefficient or Beta.
- Two components of gains are Capital Gains like Price Appreciation and Income like Dividends.
- Investors care about the Expected Return and Risk of their Portfolio Assets. Overall Risk of Portfolio is measured byStandard Deviation.